Content delivery specialist Akamai Technologies on Wednesday announced it plans to acquire rival Speedera Networks, a move designed to boost Akamai's standing against larger managed services vendors by expanding its network reach and its portfolio of services.
The deal, subject to customary closing conditions, is expected to be finalized in the second quarter. It is a stock-for-stock transaction valued at about US$130 million. Under terms of the deal, Akamai will issue about 12 million shares in exchange for all of Speedera's outstanding stock and stock options and its India-based wholly owned subsidiary.
Referred to by the companies as a merger, the agreement also puts an end to longstanding legal disputes between the two firms.
"It's almost like the Capulets and Montagues have kissed and made up," says Counse Broders, principal analyst for Internet and managed services at Current Analysis Inc. "They have been such major rivals."
Akamai has been the leader in the content delivery arena since it created the market in the late 1990s. Speedera was launched a year after Akamai, in 1999, and positioned itself as a lower-cost alternative, but was never able to draw significant share away from Akamai. By merging with Speedera, Akamai is picking up about 350 customers to add to some 1,300 current clients. It also will gain infrastructure and technical expertise, Broders says.
In addition, by combining forces with Speedera the two firms will end their legal battle that began in 2002 when Akamai sued Speedera, claiming that Speedera's CDN services infringed on Akamai patents.
"Akamai is getting clients, and that seems to be the biggest factor here," says Broders. "But to a lesser extent, they're also getting rid of some of those lawsuit issues. It lets them focus now on the bigger market and not have to worry about their next court case."
All pending litigation between the companies is stayed and will be formally dismissed once the deal closes, the companies said in a statement.
Until that time, the two companies will operate separately. As for Speedera customers, they should see little change once the deal closes, says Ajit Gupta, president, CEO and founder of Speedera.
In a letter to customers, Gupta assured clients that the merger was in their best interest.
"Our customers will benefit from the efficiencies of pooling the two companies' resources after the closing: people, technology, understanding of the market and global network coverage," he wrote.